The Credit Ratings (ratings) reflect JIC’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
The revision of the Long-Term ICR outlook to stable follows an improvement in risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), due to the divesture of capital-intensive investments and the suspension of dividend payments in 2018 and 2019. Although the company’s investment portfolio remains skewed toward real estate and equity exposures, which attract high capital charges in the BCAR model, further divestures from these asset classes are expected in the near term, which, if successful, should further strengthen the company’s risk-adjusted capitalisation. Offsetting factors in the balance sheet strength assessment include the company’s weak liquidity and increased financial leverage, driven by overdrafts and loans contracted to fund the company’s regulatory capital requirements for its branch in the
JIC’s operating performance is adequate over the underwriting cycle, as illustrated by a five-year average (2014-2018) return on equity (ROE) of 2.8%. In 2018, the company benefited from robust earnings from its operations in the
JIC has a good competitive position within
JIC has demonstrated solid controls and adequate risk management in respect of its underwriting operations. However, deficiencies in the management of investment, liquidity and capital risks have a negative impact on AM Best’s assessment of JIC’s ERM.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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Source: AM Best